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Updated: 21:58 25/09/21

Is Mario Draghi losing control?

By Duncan Richardson, News Editor

23 Sep 2016

Despite massive amounts of money printing and central bank intervention large parts of the Euro zone are on the verge of falling into a deflationary spiral. The ECB has done everything in its power to kick start the economy following the 2008 meltdown, but it now seems the ECB has finally run out of ammunition.

The ECB downgraded its GDP growth forecast and admitted there is little chance the bank will reach its 2% inflation target anytime soon. QE and negative interests have so far kept the show on the road but real growth has remained illusive. In Brussels bureaucrats are becoming increasingly worried, as official data points to a chronic slowdown in economic activity. Business confidence is collapsing and German banks and insurance companies are accusing the ECB of wrecking their business with negative rates.

The Eurozone is becoming extremely vulnerable and is quickly losing its ability to battle external forces. The danger facing the ECB is the next recession will strike before the 28-member bloc has built up sufficient defenses to fend off the next global recession.

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